Slides
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McKesson Corporation Third Quarter Fiscal 2025 Earnings Call February 5, 2025
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© 2025 McKesson Corporation. All rights reserved.2 Cautionary Statements Cautionary Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward- looking statements may be identified by their use of terminology such as “believes,” “expects,” “anticipates,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “projects,” “plans,” “estimates,” “targets,” or the negative of these words or other comparable terminology. The discussion of anticipated transaction closings, synergies, litigation outcomes, financial outlook, guidance, trends, strategy, plans, assumptions, expectations, commitments, and intentions may also include forward-looking statements. Readers should not place undue reliance on forward- looking statements, such as financial performance forecasts, which speak only as of the date they are first made. Except to the extent required by law, we undertake no obligation to update or revise our forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, or implied. Although it is not possible to predict or identify all such risks and uncertainties, we encourage investors to read the risk factors described in our publicly available filings with the Securities and Exchange Commission and news releases. These risk factors include, but are not limited to: we experience costly and disruptive legal disputes and settlements, including regarding our role in distributing controlled substances such as opioids; we might experience losses not covered by insurance or indemnification; we are subject to frequently changing, extensive, complex, and challenging healthcare and other laws; we might be adversely impacted by regulatory delays or other difficulties with acquisitions or divestitures such as the transactions described in this press release; we from time to time record significant charges from impairment to goodwill, intangibles, and other long-lived assets; we experience cybersecurity incidents that might significantly compromise our technology systems or might result in material data breaches; we may be unsuccessful in achieving our strategic growth objectives; we may be unsuccessful in our efforts to implement initiatives to reduce or optimize our costs; we are impacted by customer purchase reductions, contract non-renewals, payment defaults, and bankruptcies; our contracts with government entities involve future funding and compliance risks; we might be harmed by changes in our relationships or contracts with suppliers; our use of third-party data is subject to limitations that could impede the growth of our data services business; we might be adversely impacted by healthcare reform such as changes in pricing and reimbursement models; we might be adversely impacted by competition and industry consolidation; we are adversely impacted by changes or disruptions in product supply and have had difficulties in sourcing or selling products due to a variety of causes; we might be adversely impacted as a result of our distribution of generic pharmaceuticals; we might be adversely impacted by changes in the economic environments in which we operate; changes affecting capital and credit markets might impede access to credit, increase borrowing costs, and disrupt banking services for us and our customers and suppliers and might impair the financial soundness of our customers and suppliers; we might be adversely impacted by changes in tax legislation or challenges to our tax positions; we might be adversely impacted by events outside of our control, such as widespread public health issues, natural disasters, political events and other catastrophic events; we may be adversely affected by global climate change or by legal, regulatory, or market responses to such change; and governance issues and regulations, including those related to social issues, climate change, and sustainability, and stakeholder response thereto may have an adverse effect on our business, financial condition, and results of operations and damage our reputation. GAAP / Non-GAAP Reconciliation In an effort to provide additional and useful information regarding the Company’s financial results and other financial information as determined by generally accepted accounting principles (GAAP), certain materials in this presentation include non-GAAP information. The Company believes the presentation of non-GAAP measures provides useful supplemental information to investors with regard to its operating performance as well as comparability of financial results period-over-period. A reconciliation of the non-GAAP information to GAAP, and other related information is available in the appendix to this presentation, tables accompanying each period’s earnings press release, materials furnished to the SEC, and posted to www.mckesson.com under the “Investors” tab.
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Accelerating the Enterprise Sustaining Long-Term Growth and Value Our Purpose: Advancing Health Outcomes for All® Long-Term EPS Target: 12% - 14% growth Our Strategic Focus and Growth Pillars: •Integrity & Inclusion •Customer-first •Accountability •Respect •Excellence 3 © 2025 McKesson Corporation. All rights reserved. See Supplemental Information for details on Long-Term EPS Target. Focus on People & Culture Strengthen North American Distribution Modernize & Accelerate the Portfolio Enhance Oncology & Biopharma Platforms Organic Growth Operating Leverage Capital Allocation + +
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Third Quarter Fiscal 2025 Results
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© 2025 McKesson Corporation. All rights reserved.5 See endnotes for details Business Summary Company Updates • Ms. Lynne Doughtie and Dr. Julie Gerberding joined McKesson’s Board of Directors on February 3, 2025 • Signed a definitive agreement to acquire an 80% controlling interest in PRISM Vision Holdings, LLC1 • Closed the transaction to sell its Canada-based Rexall and Well.ca retail businesses • Revenues of $95.3 billion increased 18% • Adjusted Operating Profit of $1.5 billion increased 16% • Earnings per Diluted Share of$6.95 increased $2.53 • Adjusted Earnings per Diluted Share of $8.03 increased 4% • Raising and narrowing Fiscal 2025 Adjusted Earnings per Diluted Share outlook to $32.55 to $32.95 from $32.40 to $33.00 Disciplined Execution Delivers Strong Performance
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© 2025 McKesson Corporation. All rights reserved.6 Adjusted Results Q3 YoY YTD Q3 YoY ($ and shares in millions, except per share amounts) FY 25 Change FY 25 Change GAAP Revenues $ 95,294 18 % $ 268,228 15 % Gross Profit $ 3,342 7 % $ 9,648 6 % Operating Expenses $ (1,948) 2 % $ (5,864) 5 % Operating Profit $ 1,463 16 % $ 4,059 12 % Interest Expense $ (62) 7 % $ (204) 32 % Income Tax Expense $ (335) 164 % $ (751) 52 % Net Income Attributable to Noncontrolling Interests1 $ (50) 14 % $ (144) 15 % Earnings $ 1,016 (2) % $ 2,960 3 % Earnings per Diluted Share $ 8.03 4 % $ 22.97 8 % GAAP Diluted weighted-average common shares 126.6 (5) % 128.8 (5) % See endnotes for details Consolidated adjusted financial information Q3 and YTD Fiscal 2025 Results
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© 2025 McKesson Corporation. All rights reserved.7 See endnotes for details Q3 FY24 Adj. EPS Operating Performance McKesson Ventures Diluted Weighted Average Common Shares Tax Rate Other1 Q3 FY25 Adj. EPS $0.91 $0.09 $(1.16) $0.04 $7.74 $8.03 $0.41 Adjusted Earnings Per Share Results Q3 Fiscal 2025 year-over-year
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© 2025 McKesson Corporation. All rights reserved.8 U.S. Pharmaceutical Q3 and YTD Fiscal 2025 Results Q3 revenue growth led by higher volumes from retail national account customers and growth from specialty product distribution, including higher volumes from oncology and specialty provider settings Q3 Adjusted Segment Operating Profit increase driven by growth in the distribution of specialty products to providers and health systems, the onboarding of a new strategic customer, and growth in our differentiated Oncology platform; partially offset by anticipated lower distribution volumes of COVID-19 vaccines as compared to the prior year Results Q3 YoY YTD Q3 YoY ($ in millions) FY 25 Change FY 25 Change U.S. Pharmaceutical Revenues $ 87,110 19 % $ 244,551 16 % Adjusted Segment Operating Profit $ 944 14 % $ 2,661 10 % Adjusted Segment Operating Profit Margin 1.08 % (5) bp 1.09 % (6) bp
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© 2025 McKesson Corporation. All rights reserved.9 Q3 revenue increase driven by increased prescription volumes in our third-party logistics and technology services businesses Q3 Adjusted Segment Operating Profit increase driven by growth in access and affordability solutions Results Q3 YoY YTD Q3 YoY ($ in millions) FY 25 Change FY 25 Change Prescription Technology Solutions Revenues $ 1,371 14 % $ 3,877 8 % Adjusted Segment Operating Profit $ 235 22 % $ 676 8 % Adjusted Segment Operating Profit Margin 17.14 % 112 bp 17.44 % 3 bp Prescription Technology Solutions Q3 and YTD Fiscal 2025 Results
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© 2025 McKesson Corporation. All rights reserved.10 Q3 revenue decrease driven by lower contributions from the illness season, including vaccines and testing, in the primary care channel Q3 Adjusted Segment Operating Profit increase driven by operational efficiencies from the cost optimization initiatives, partially offset by lower contributions from the illness season in the primary care channel Results Q3 YoY YTD Q3 YoY ($ in millions) FY 25 Change FY 25 Change Medical-Surgical Solutions Revenues $ 2,949 (3) % $ 8,533 1 % Adjusted Segment Operating Profit $ 294 4 % $ 737 (4) % Adjusted Segment Operating Profit Margin 9.97 % 67 bp 8.64 % (46) bp Medical-Surgical Solutions Q3 and YTD Fiscal 2025 Results
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© 2025 McKesson Corporation. All rights reserved.11 Q3 revenue increase driven by higher pharmaceutical distribution volumes in the Canadian business Q3 Adjusted Segment Operating Profit increase driven by higher pharmaceutical distribution volumes in the Canadian business and discontinued recording of depreciation and amortization on Canada-based Rexall and Well.ca retail businesses, which were divested during the quarter Results Q3 YoY YTD Q3 YoY ($ in millions) FY 25 Change FY 25 Change International Revenues $ 3,860 6 % $ 11,260 6 % Adjusted Segment Operating Profit $ 124 18 % $ 326 15 % Adjusted Segment Operating Profit Margin 3.21 % 32 bp 2.90 % 22 bp International Q3 and YTD Fiscal 2025 Results
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© 2025 McKesson Corporation. All rights reserved.12 Q3 Adjusted Corporate Expenses decrease driven by pre-tax gains of $6 million associated with McKesson Ventures’ equity investments, compared to pre-tax losses of $8 million in the third quarter of fiscal 2024 Results Q3 YoY YTD Q3 YoY ($ in millions) FY 25 Change FY 25 Change Corporate Revenues $ 4 —% $ 7 —% Adjusted Corporate Expenses $ (134) (9) % $ (341) (25) % Corporate Q3 and YTD Fiscal 2025 Results
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© 2025 McKesson Corporation. All rights reserved.13 See endnotes for details Consistent cash flow + capital allocation driving shareholder value ($ in millions) YE Cash1 3/31/24 Operating Cash Flows Excluding Timing Adjustment Timing Adjustment2 Capital Expenditures Share Repurchases + Dividends Other3 Q3 Cash1 12/31/24 $4,583 $(581) $(3,100) $1,892 $1,131 $(2,000)$337
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Fiscal 2025 Outlook On the following slides, McKesson presents an overview of its fiscal 2025 Outlook and assumptions. The company does not provide forward-looking guidance on a GAAP basis as McKesson is unable to provide a quantitative reconciliation of forward- looking Non-GAAP measures to the most directly comparable forward-looking GAAP measure, without unreasonable effort. McKesson cannot reasonably forecast LIFO inventory-related adjustments, certain litigation loss and gain contingencies, restructuring, impairment and related charges, and other adjustments, which are difficult to predict and estimate. These items are generally uncertain and depend on various factors, many of which are beyond the company’s control, and as such, any associated estimate and its impact on GAAP performance could vary materially.
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© 2025 McKesson Corporation. All rights reserved.15 Fiscal 2025 Adjusted Operating Profit growth of 13% to 15% compared to the prior year Fiscal 2025 Adjusted Earnings per Diluted Share guidance range indicates 19% to 20% growth compared to the prior year $32.55 to $32.95 Anticipate approximately $3.2 billion in share repurchases in Fiscal 2025 Focused investments to accelerate the growth of our oncology, other specialties, and biopharma services platforms Strong Business Performance Capital Deployment Raising Fiscal 2025 Adjusted EPS outlook
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© 2025 McKesson Corporation. All rights reserved.16 FY24 Actual Operating Performance McKesson Ventures Diluted Weighted Average Common Shares Other1 FY25 Outlook February 5, 2025 19 to 20% growth $32.55 to $32.95 $27.44 See endnotes for details Fiscal 2025 Adjusted EPS outlook
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© 2025 McKesson Corporation. All rights reserved.17 Metric Fiscal 2025 Outlook Fiscal 2024 Actual Earnings per Diluted Share $32.55 to $32.95 Previously $32.40 to $33.00 $27.44 GAAP Revenues 16% to 18% growth Previously 15% to 17% growth 12% growth Operating Profit 13% to 15% growth 2% decline Corporate Expenses $480 to $520 million Previously $510 to $560 million $648 million Interest Expense $255 to $265 million Previously $240 to $260 million $230 million Income Attributable to Noncontrolling Interests1 $185 to $195 million Previously $180 to $190 million $165 million Effective Tax Rate 17% to 19% 17.7% Free Cash Flow $4.8 to $5.2 billion $3.6 billion Share repurchases Approximately $3.2 billion $3.0 billion GAAP Diluted weighted average common shares Approximately 128 million Previously 127 to 129 million 134.1 million See endnotes for details Fiscal 2025 adjusted outlook Consolidated metrics
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© 2025 McKesson Corporation. All rights reserved.18 U.S. Pharmaceutical Prescription Technology Solutions Medical-Surgical Solutions International Revenue 18% to 20% growth Previously 16% to 19% growth 9% to 12% growth Previously 8% to 12% growth Flat Previously 1% to 5% growth 3% to 7% growth Previously 5% to 9% growth Adjusted Operating Profit 11% to 13% growth Previously 9% to 11% growth 12% to 15% growth Previously 11% to 15% growth Flat Previously low end of 6% to 8% growth 10% to 14% growth Previously 16% to 20% growth Fiscal 2025 adjusted outlook Segment metrics
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Appendix
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© 2025 McKesson Corporation. All rights reserved.20 These notes refer to the financial metrics and/or defined terms presented on: Slide 3 – Accelerating the Enterprise; Sustaining Long-Term Growth and Value 1. Long-Term EPS Target refers to Long-Term Adjusted EPS Growth which excludes gains or losses associated with McKesson Venture’s portfolio investments Slide 5 – Disciplined Execution Delivers Strong Performance 1. Subject to customary closing conditions, including required regulatory clearance Slide 6 – Consolidated adjusted financial information 1. Non-GAAP measure representing Net income attributable to noncontrolling interests adjusted for the proportionate share of acquisition-related intangibles amortization and transaction- related expenses of $1 million in the third quarter fiscal 2025 and $4 million in the first nine months of fiscal 2025 Slide 7 – Adjusted Earnings Per Share Results 1. Includes Adjusted Net Income Attributable to Non-Controlling Interests, Adjusted Interest Rate; and discontinued recording of depreciation and amortization on Canada based businesses, which were divested during the quarter Slide 13 – Consistent cash flow + capital allocation driving shareholder value 1. Cash comprises cash and cash equivalents 2. Reflects the impact of timing, including the day of the week that the third quarter ended on, which led to approximately $2 billion of cash to shift from the third quarter to the fourth quarter 3. Includes Other non-capital expenditure investing; net cash movement in Long-Term Debt; net proceeds from short-term borrowings; Common Stock Issuances, Other Financing, the effect of exchange rate changes on cash, cash equivalents, and restricted. Slide 16 – Fiscal 2025 Adjusted EPS outlook 1. Includes Adjusted Effective Tax Rate; Adjusted Net Income Attributable to Non-Controlling Interests; Adjusted Interest Expense; and discontinued recording of depreciation and amortization on Canada based businesses, which were divested during the quarter Slide 17 – Fiscal 2025 adjusted outlook (Consolidated metrics) 1. Non-GAAP measure representing Net income attributable to noncontrolling interests adjusted for the proportionate share of acquisition-related intangibles amortization and transaction- related expenses Endnotes
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© 2025 McKesson Corporation. All rights reserved.21 McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions) Schedule 2 Three Months Ended December 31, Nine Months Ended December 31, 2024 2023 Change 2024 2023 Change Net income (GAAP) $ 928 $ 630 47 % $ 2,175 $ 2,330 (7)% Net income attributable to noncontrolling interests (GAAP) (49) (41) 20 (140) (119) 18 Net income attributable to McKesson Corporation (GAAP) 879 589 49 2,035 2,211 (8) Pre-tax adjustments: Amortization of acquisition-related intangibles 53 62 (15) 176 186 (5) Transaction-related expenses and adjustments (1) (2) 32 21 52 712 (7) — LIFO inventory-related adjustments 89 2 — 85 89 (4) Gains from antitrust legal settlements (31) (23) 35 (184) (220) (16) Restructuring, impairment, and related charges, net (3) 32 4 700 276 84 229 Claims and litigation charges, net (4) — — — 108 (2) — Other adjustments, net (5) (6) — 525 (100) (162) 735 (122) Income tax effect on pre-tax adjustments (37) (145) (74) (82) (204) (60) Net income attributable to noncontrolling interests effect on pre-tax adjustments (1) (3) (67) (4) (6) (33) Adjusted Earnings (Non-GAAP) $ 1,016 $ 1,032 (2)% $ 2,960 $ 2,866 3 % Refer to Slide 25 of this presentation for all footnote references. GAAP to Non-GAAP Reconciliation Q3 Fiscal 2025 and Q3 Fiscal 2024
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© 2025 McKesson Corporation. All rights reserved.22 Refer to Slide 25 of this presentation for all footnote references. McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions, except per share amounts) Three Months Ended December 31, Nine Months Ended December 31, 2024 2023 Change 2024 2023 Change Earnings per diluted common share attributable to McKesson Corporation (GAAP) (a) $ 6.95 $ 4.42 57 % $ 15.80 $ 16.39 (4)% After-tax adjustments: Amortization of acquisition-related intangibles 0.31 0.35 (11) 1.00 1.05 (5) Transaction-related expenses and adjustments 0.24 0.14 71 5.47 0.04 — LIFO inventory-related adjustments 0.52 0.02 — 0.49 0.49 — Gains from antitrust legal settlements (0.18) (0.13) 38 (1.06) (1.21) (12) Restructuring, impairment, and related charges, net 0.19 0.03 533 1.58 0.47 236 Claims and litigation charges, net — — — 0.62 (0.02) — Other adjustments, net — 2.91 (100) (0.93) 4.03 (123) Adjusted Earnings per Diluted Share (Non-GAAP) (a) $ 8.03 $ 7.74 4 $ 22.97 $ 21.24 8 % Diluted weighted-average common shares outstanding 126.6 133.3 (5)% 128.8 134.9 (5)% Schedule 2 (Continued) GAAP to Non-GAAP Reconciliation Q3 Fiscal 2025 and Q3 Fiscal 2024
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© 2025 McKesson Corporation. All rights reserved.23 Refer to Slide 25 of this presentation for all footnote references. McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions) Schedule 2 (Continued) Three Months Ended December 31, Nine Months Ended December 31, 2024 2023 Change 2024 2023 Change Gross profit (GAAP) $ 3,284 $ 3,152 4 % $ 9,684 $ 9,243 5 % Pre-tax adjustments: LIFO inventory-related adjustments 89 2 — 85 89 (4) Gains from antitrust legal settlements (31) (23) 35 (184) (220) (16) Restructuring, impairment, and related charges, net (3) — — — 63 — — Adjusted Gross Profit (Non-GAAP) $ 3,342 $ 3,131 7 % $ 9,648 $ 9,112 6 % Total operating expenses (GAAP) $ (2,060) $ (2,510) (18)% $ (6,853) $ (6,550) 5 % Pre-tax adjustments: Amortization of acquisition-related intangibles 53 62 (15) 176 186 (5) Transaction-related expenses and adjustments (1) (2) 27 15 80 697 (24) — Restructuring, impairment, and related charges, net (3) 32 4 700 213 84 154 Claims and litigation charges, net (4) — — — 108 (2) — Other adjustments, net (5) — 525 (100) (205) 735 (128) Adjusted Operating Expenses (Non-GAAP) $ (1,948) $ (1,904) 2 % $ (5,864) $ (5,571) 5 % Other income, net (GAAP) $ 69 $ 34 103 % $ 233 $ 98 138 % Pre-tax adjustments: Transaction-related expenses and adjustments — — — (1) — — Other adjustments, net (6) — — — 43 — — Adjusted Other Income (Non-GAAP) $ 69 $ 34 103 % $ 275 $ 98 181 % GAAP to Non-GAAP Reconciliation Q3 Fiscal 2025 and Q3 Fiscal 2024
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© 2025 McKesson Corporation. All rights reserved.24 Refer to Slide 25 of this presentation for all footnote references. McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions) Schedule 2 (Continued) Three Months Ended December 31, Nine Months Ended December 31, 2024 2023 Change 2024 2023 Change Interest expense (GAAP) $ (67) $ (64) 5 % $ (220) $ (172) 28 % Pre-tax adjustments: Transaction-related expenses and adjustments 5 6 (17) 16 17 (6) Adjusted Interest Expense (Non-GAAP) $ (62) $ (58) 7 % $ (204) $ (155) 32 % Income tax benefit (expense) (GAAP) $ (298) $ 18 — %$ (669) $ (289) 131 % Tax adjustments: Amortization of acquisition-related intangibles (13) (13) — (43) (40) 8 Transaction-related expenses and adjustments (1) (2) (1) — — (8) 14 (157) LIFO inventory-related adjustments (23) (1) — (22) (23) (4) Gains from antitrust legal settlements 8 6 33 48 57 (16) Restructuring, impairment, and related charges, net (3) (8) (1) 700 (72) (21) 243 Claims and litigation charges, net (4) — — — (28) — — Other adjustments, net (5) (6) — (136) (100) 43 (191) 123 Adjusted Income Tax Expense (Non-GAAP) $ (335) $ (127) 164 % $ (751) $ (493) 52 % GAAP to Non-GAAP Reconciliation Q3 Fiscal 2025 and Q3 Fiscal 2024
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© 2025 McKesson Corporation. All rights reserved.25 McKESSON CORPORATION RECONCILIATION OF GAAP OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions, except per share amounts) Schedule 2 (Continued) (a) Certain computations may reflect rounding adjustments. Any percentage changes displayed which are not meaningful are displayed as zero percent. Refer to the section entitled "Financial Statement Notes" of this presentation. For more information relating to the Adjusted Earnings (Non-GAAP), Adjusted Earnings per Diluted Share (Non-GAAP), Adjusted Gross Profit (Non-GAAP), Adjusted Operating Expenses (Non-GAAP), Adjusted Other income (Non-GAAP), Adjusted Interest Expense (Non-GAAP), and Adjusted Income Tax Expense (Non-GAAP) definitions, refer to the section entitled “Supplemental Non-GAAP Financial Information” of this presentation. GAAP to Non-GAAP Reconciliation Q3 Fiscal 2025 and Q3 Fiscal 2024
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© 2025 McKesson Corporation. All rights reserved.26 McKESSON CORPORATION RECONCILIATION OF GAAP SEGMENT OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions) Three Months Ended December 31, 2024 2023 Change As reported (GAAP) Adjustments As adjusted (Non-GAAP) As reported (GAAP) Adjustments As adjusted (Non-GAAP) As reported (GAAP) As adjusted (Non-GAAP) REVENUES U.S. Pharmaceutical $ 87,110 $ —$ 87,110 $ 73,023 $ —$ 73,023 19 % 19 % Prescription Technology Solutions 1,371 — 1,371 1,205 — 1,205 14 14 Medical-Surgical Solutions 2,949 — 2,949 3,031 — 3,031 (3) (3) International 3,860 — 3,860 3,639 — 3,639 6 6 Corporate 4 — 4 — — — — — Revenues $ 95,294 $ —$ 95,294 $ 80,898 $ —$ 80,898 18 % 18 % OPERATING PROFIT U.S. Pharmaceutical (3) $ 854 $ 90 $ 944 $ 307 $ 521 $ 828 178 % 14 % Prescription Technology Solutions (2) 219 16 235 178 15 193 23 22 Medical-Surgical Solutions (3) 269 25 294 268 14 282 — 4 International (1) 111 13 124 126 (21) 105 (12) 18 Subtotal 1,453 144 1,597 879 529 1,408 65 13 Corporate expenses, net (1) (3) (160) 26 (134) (203) 56 (147) (21) (9) Income before interest expense and income taxes $ 1,293 $ 170 $ 1,463 $ 676 $ 585 $ 1,261 91 % 16 % OPERATING PROFIT AS A % OF REVENUES U.S. Pharmaceutical 0.98 % 1.08 % 0.42 % 1.13 % 56 bp (5) bp Prescription Technology Solutions 15.97 17.14 14.77 16.02 120 112 Medical-Surgical Solutions 9.12 9.97 8.84 9.30 28 67 International 2.88 3.21 3.46 2.89 (58) 32 Any percentage changes displayed above which are not meaningful are displayed as zero percent. Refer to the section entitled "Financial Statement Notes" of this presentation. For more information relating to the Adjusted Segment Operating Profit (Non-GAAP), Adjusted Operating Profit (Non-GAAP), Adjusted Corporate Expenses (Non-GAAP), and Adjusted Segment Operating Profit Margin (Non- GAAP) definitions, refer to the section entitled “Supplemental Non-GAAP Financial Information” of this presentation. Schedule 3 GAAP to Non-GAAP Reconciliation Q3 Fiscal 2025 and Q3 Fiscal 2024
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© 2025 McKesson Corporation. All rights reserved.27 McKESSON CORPORATION RECONCILIATION OF GAAP SEGMENT OPERATING RESULTS TO ADJUSTED RESULTS (NON-GAAP) (unaudited) (in millions) Nine Months Ended December 31, 2024 2023 Change As reported (GAAP) Adjustments As adjusted (Non-GAAP) As reported (GAAP) Adjustments As adjusted (Non-GAAP) As reported (GAAP) As adjusted (Non-GAAP) REVENUES U.S. Pharmaceutical $ 244,551 $ —$ 244,551 $ 209,949 $ —$ 209,949 16 % 16 % Prescription Technology Solutions 3,877 — 3,877 3,589 — 3,589 8 8 Medical-Surgical Solutions 8,533 — 8,533 8,476 — 8,476 1 1 International 11,260 — 11,260 10,582 — 10,582 6 6 Corporate 7 — 7 — — — — — Revenues $ 268,228 $ —$ 268,228 $ 232,596 $ —$ 232,596 15 % 15 % OPERATING PROFIT U.S. Pharmaceutical (3) (4) (5) (6) $ 2,710 $ (49) $ 2,661 $ 1,727 $ 687 $ 2,414 57 % 10 % Prescription Technology Solutions (2) 627 49 676 647 (22) 625 (3) 8 Medical-Surgical Solutions (3) 546 191 737 739 32 771 (26) (4) International (1) (307) 633 326 249 35 284 (223) 15 Subtotal 3,576 824 4,400 3,362 732 4,094 6 7 Corporate expenses, net (1) (3) (4) (7) (512) 171 (341) (571) 116 (455) (10) (25) Income before interest expense and income taxes $ 3,064 $ 995 $ 4,059 $ 2,791 $ 848 $ 3,639 10 % 12 % OPERATING PROFIT AS A % OF REVENUES U.S. Pharmaceutical 1.11 % 1.09 % 0.82 % 1.15 % 29 bp (6) bp Prescription Technology Solutions 16.17 17.44 18.03 17.41 (186) 3 Medical-Surgical Solutions 6.40 8.64 8.72 9.10 (232) (46) International (2.73) 2.90 2.35 2.68 (508) 22 Schedule 3 (Continued) Any percentage changes displayed above which are not meaningful are displayed as zero percent. Refer to the section entitled "Financial Statement Notes" of this presentation. For more information relating to the Adjusted Segment Operating Profit (Non-GAAP), Adjusted Operating Profit (Non-GAAP), Adjusted Corporate Expenses (Non-GAAP), FX-Adjusted (Non-GAAP), and Adjusted Segment Operating Profit Margin (Non-GAAP) definitions, refer to the section entitled “Supplemental Non-GAAP Financial Information” of this presentation. GAAP to Non-GAAP Reconciliation Q3 Fiscal 2025 and Q3 Fiscal 2024
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© 2025 McKesson Corporation. All rights reserved.28 Nine Months Ended December 31, 2024 2023 Change GAAP CASH FLOW CATEGORIES Net cash provided by (used in) operating activities $ (1,663) $ 167 — % Net cash used in investing activities (509) (495) 3 Net cash used in financing activities (1,110) (2,374) (53) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (21) 6 (450) Net decrease in cash, cash equivalents, and restricted cash $ (3,303) $ (2,696) 23 % FREE CASH FLOW (NON-GAAP) Net cash provided by (used in) operating activities $ (1,663) $ 167 — % Payments for property, plant, and equipment (368) (243) 51 Capitalized software expenditures (213) (175) 22 Free Cash Flow (Non-GAAP) $ (2,244) $ (251) 794 % Any percentage changes displayed above which are not meaningful are displayed as zero percent. For more information relating to the Free Cash Flow (Non-GAAP) definition, refer to the section entitled “Supplemental Non-GAAP Financial Information” of this presentation. McKESSON CORPORATION RECONCILIATION OF GAAP CASH FLOW TO FREE CASH FLOW (NON-GAAP) (unaudited) (in millions) Schedule 6 GAAP to Non-GAAP Reconciliation Q3 Fiscal 2025 and Q3 Fiscal 2024
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© 2025 McKesson Corporation. All rights reserved.29 McKESSON CORPORATION FINANCIAL STATEMENT NOTES 1. Transaction-related expenses and adjustments for the three and nine months ended December 31, 2024 includes a net loss of $23 million (pre-tax and after-tax) and $666 million (pre-tax and after-tax), respectively, to remeasure assets and liabilities held for sale to fair value less costs to sell related to an agreement to sell certain of our Canadian businesses. Net charges (pre-tax and after-tax) of $11 million included within International, and $12 million included within Corporate expenses, net, and $604 million included within International, and $62 million included within Corporate expenses, net, respectively, for the three and nine months ended December 31, 2024. These net charges are primarily to remeasure assets and liabilities held for sale to fair value less costs to sell, including the effect of accumulated other comprehensive income balances associated with the disposal group, and are included under "total operating expenses" in the reconciliation of McKesson's GAAP operating results to adjusted results (Non-GAAP) provided in Schedule 2 of the accompanying financial statement tables. 2. Transaction-related expenses and adjustments for the three and nine months ended December 31, 2023 includes pre-tax gains of $2 million (pre-tax and after- tax) and $78 million ($58 million after-tax), respectively, related to fair value remeasurements of the contingent consideration liability recognized as part of our acquisition of Rx Savings Solutions, LLC. The gains, within Prescription Technology Solutions, resulted from remeasurement of the liability to fair value at the end of each reporting period based on the estimated amount and timing of projected operational and financial information and the probability of achievement of performance milestones. These pre-tax gains are included under "total operating expenses" in the reconciliation of McKesson's GAAP operating results to adjusted results (Non-GAAP) provided in Schedule 2 of the accompanying financial statement tables. 3. Restructuring, impairment, and related charges, net for the three and nine months ended December 31, 2024 includes pre-tax charges of $32 million ($24 million after-tax) and $276 million ($204 million after-tax), respectively, primarily within Medical-Surgical Solutions, U.S. Pharmaceutical, and Corporate expenses, net. The three and nine months ended December 31, 2023 includes pre-tax charges of $4 million ($3 million after-tax) and $84 million ($63 million after-tax), respectively, primarily within Corporate expenses, net. These charges are included under "gross profit" and "total operating expenses" in the reconciliation of McKesson's GAAP operating results to adjusted results (Non-GAAP) provided in Schedule 2 of the accompanying financial statement tables. 4. Claims and litigation charges, net for the nine months ended December 31, 2024 includes pre-tax charges of $114 million ($86 million after-tax) related to our estimated liability for opioid-related claims of a nationwide group of certain third-party payors. We recorded charges of $57 million ($43 million after-tax) within Corporate expenses, net and $57 million ($43 million after-tax) within U.S. Pharmaceutical. These charges are included under "total operating expenses" in the reconciliation of McKesson's GAAP operating results to adjusted results (Non-GAAP) provided in Schedule 2 of the accompanying financial statement tables. 1 of 2 Financial Statement Notes
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© 2025 McKesson Corporation. All rights reserved.30 FINANCIAL STATEMENT NOTES (continued) 5. Other adjustments, net for the nine months ended December 31, 2024 includes a pre-tax credit of $203 million ($150 million after-tax), and for the three and nine months ended December 31, 2023 includes pre-tax charges of $515 million ($381 million after-tax) and $725 million ($536 million after-tax), respectively, within U.S. Pharmaceutical related to the bankruptcy petition filing of our customer, Rite Aid Corporation (including certain of its subsidiaries, "Rite Aid") filed in October 2023. The charge within the second quarter of fiscal 2024 represents the remaining uncollected trade accounts receivable balance as of September 30, 2023 due to us from Rite Aid. After Rite Aid successfully emerged from bankruptcy in August 2024, we reassessed our initial estimates made in conjunction with the previously reserved prepetition balances including cash received during the period, resulting in the credit recorded in the second quarter of fiscal 2025. Management believes the credit and charge are not reflective of allowances and estimated recoveries recorded in the normal course of operations and are related to Rite Aid's bankruptcy reorganization, and therefore are excluded from the determination of our adjusted results (Non-GAAP). These amounts are included under "total operating expenses" in the reconciliation of McKesson's GAAP operating results to adjusted results (Non-GAAP) provided in Schedule 2 of the accompanying financial statement tables. 6. Other adjustments, net for the nine months ended December 31, 2024 includes a pre-tax charge of $43 million ($31 million after-tax) within U.S. Pharmaceutical related to a loss from one of the Company's investments in equity securities. This charge is included under "other income, net" in the reconciliation of McKesson's GAAP operating results to adjusted results (Non-GAAP) provided in Schedule 2 of the accompanying financial statement tables. 7. During the nine months ended December 31, 2024, the Company recognized a pre-tax net gain of $100 million ($74 million after-tax) within Corporate expenses, net related to a recapitalization event of one of our investments in equity securities, which resulted in an increase to the carrying value of this investment. This gain was recorded in “Other income, net” in the Condensed Consolidated Statements of Operations (GAAP) provided in Schedule 1 of the accompanying financial statement tables. Financial Statement Notes 2 of 2
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© 2025 McKesson Corporation. All rights reserved.31 1 of 3McKESSON CORPORATION SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION In an effort to provide investors with additional information regarding the Company's financial results as determined by generally accepted accounting principles ("GAAP"), McKesson Corporation (the "Company" or "we") also presents the following Non-GAAP measures in this presentation. • Adjusted Gross Profit (Non-GAAP): We define Adjusted Gross Profit as GAAP gross profit, excluding transaction-related expenses and adjustments, last-in, first-out (“LIFO”) inventory-related adjustments, gains from antitrust legal settlements, and other adjustments. • Adjusted Operating Expenses (Non-GAAP): We define Adjusted Operating Expenses as GAAP total operating expenses, excluding amortization of acquisition-related intangibles, transaction-related expenses and adjustments, restructuring, impairment, and related charges, claims and litigation charges, and other adjustments. • Adjusted Other Income (Non-GAAP): We define Adjusted Other Income as GAAP other income (expense), net, excluding amortization of acquisition-related intangibles, transaction-related expenses and adjustments, and other adjustments. • Adjusted Interest Expense (Non-GAAP): We define Adjusted Interest Expense as GAAP interest expense, excluding transaction-related expenses and adjustments related to net interest expense incurred from cross-currency swaps used to hedge the changes in the fair value of the Company's foreign currency-denominated notes resulting from changes in benchmark interest rates and foreign currency exchange rates. The foreign currency-denominated notes were previously designated as non-derivative net investment hedges of portions of the Company's net investments in its now-divested European businesses against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. • Adjusted Income Tax Expense (Non-GAAP): We define Adjusted Income Tax Expense as GAAP income tax benefit (expense), excluding the income tax effects of amortization of acquisition-related intangibles, transaction-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment, and related charges, claims and litigation charges, and other adjustments. Income tax effects are calculated in accordance with Accounting Standards Codification ("ASC") 740, “Income Taxes,” which is the same accounting principle used by the Company when presenting its GAAP financial results. • Adjusted Earnings (Non-GAAP): We define Adjusted Earnings as GAAP income from continuing operations attributable to McKesson, excluding amortization of acquisition-related intangibles, transaction- related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment, and related charges, claims and litigation charges, other adjustments, as well as the related income tax effects for each of these items, as applicable. • Adjusted Earnings per Diluted Share (Non-GAAP): We define Adjusted Earnings per Diluted Share as GAAP earnings per diluted common share from continuing operations attributable to McKesson, excluding per share impacts of amortization of acquisition-related intangibles, transaction-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment, and related charges, claims and litigation charges, other adjustments, as well as the related income tax effects for each of these items, as applicable, divided by diluted weighted-average shares outstanding. Supplemental Non-GAAP Financial Information
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© 2025 McKesson Corporation. All rights reserved.32 SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued) • Adjusted Segment Operating Profit (Non-GAAP) and Adjusted Segment Operating Profit Margin (Non-GAAP): We define Adjusted Segment Operating Profit as GAAP segment operating profit, excluding amortization of acquisition-related intangibles, transaction-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment, and related charges, and other adjustments. We define Adjusted Segment Operating Profit Margin as Adjusted Segment Operating Profit (Non-GAAP) divided by GAAP segment revenues. • Adjusted Corporate Expenses (Non-GAAP): We define Adjusted Corporate Expenses as GAAP corporate expenses, net, excluding transaction-related expenses and adjustments, restructuring, impairment, and related charges, claims and litigation charges, and other adjustments. • Adjusted Operating Profit (Non-GAAP): We define Adjusted Operating Profit as GAAP income from continuing operations before interest expense and income taxes, excluding amortization of acquisition- related intangibles, transaction-related expenses and adjustments, LIFO inventory-related adjustments, gains from antitrust legal settlements, restructuring, impairment, and related charges, claims and litigation charges, and other adjustments. The following provides further details regarding the adjustments made to our GAAP financial results to arrive at our Non-GAAP measures as defined above: Amortization of acquisition-related intangibles - Amortization charges for intangible assets directly related to business combinations and the formation of joint ventures. Transaction-related expenses and adjustments - Transaction, integration, and other expenses that are directly related to business combinations, the formation of joint ventures, divestitures, and other transaction-related costs including initial public offering costs. Examples include transaction closing costs, professional service fees, legal fees, severance charges, retention payments and employee relocation expenses, facility or other exit-related expenses, certain fair value adjustments including deferred revenues, contingent consideration and inventory, recoveries of acquisition-related expenses or post-closing expenses, net interest expense impact of hedging foreign currency-denominated notes, bridge loan fees and gains or losses on business combinations, and divestitures of businesses that do not qualify as discontinued operations. LIFO inventory-related adjustments - LIFO inventory-related non-cash charges or credit adjustments. Gains from antitrust legal settlements - Net cash proceeds representing the Company’s share of antitrust legal settlements. Restructuring, impairment, and related charges - Restructuring charges that are incurred for programs in which we change our operations, the scope of a business undertaken by our business units, or the manner in which that business is conducted as well as long-lived asset impairments. Such charges may include employee severance, retention bonuses, facility closure or consolidation costs, lease or contract termination costs, asset impairments, accelerated depreciation and amortization, and other related expenses. The restructuring programs may be implemented due to the sale or discontinuation of a product line, reorganization or management structure changes, headcount rationalization, realignment of operations or products, integration of acquired businesses, and/or company-wide cost saving initiatives. The amount and/or frequency of these restructuring charges are not part of our underlying business, which include normal levels of reinvestment in the business. Any credit adjustments due to subsequent changes in estimates are also excluded from adjusted results. Claims and litigation charges - Adjustments to certain of the Company’s reserves, including those related to estimated probable settlements for its controlled substance monitoring and reporting, and opioid- related claims, as well as any applicable income items or credit adjustments due to subsequent changes in estimates. This does not include our legal fees to defend claims, which are expensed as incurred. This also may include charges or credits for general non-operational claims not directly related to our ongoing business. 2 of 3 Supplemental Non-GAAP Financial Information
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© 2025 McKesson Corporation. All rights reserved.33 SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (continued) Other adjustments - The Company evaluates the nature and significance of transactions qualitatively and quantitatively on an individual basis and may include them in the determination of our adjusted results from time to time. While not all-inclusive, other adjustments may include: other asset impairments; gains or losses from debt extinguishment; and other similar substantive and/or infrequent items as deemed appropriate. The Company evaluates the aforementioned Non-GAAP measures on a periodic basis and updates the definitions from time to time. The evaluation considers both the quantitative and qualitative aspects of the Company’s presentation of Non-GAAP adjusted results. A reconciliation of McKesson’s GAAP financial results to Non-GAAP financial results is provided in Schedules 2 and 3 of the financial statement tables included with this presentation. • Free Cash Flow (Non-GAAP): We define free cash flow as net cash provided by (used in) operating activities less payments for property, plant, and equipment and capitalized software expenditures, as disclosed in our condensed consolidated statements of cash flows. A reconciliation of McKesson’s GAAP financial results to Free Cash Flow (Non-GAAP) is provided in Schedule 6 of the financial statement tables included with this presentation. The Company believes the presentation of Non-GAAP measures provides useful supplemental information to investors with regard to its operating performance, as well as assists with the comparison of its past financial performance to the Company’s future financial results. Moreover, the Company believes that the presentation of Non-GAAP measures assists investors’ ability to compare its financial results to those of other companies in the same industry. However, the Company's Non-GAAP measures used in this presentation may be defined and calculated differently by other companies in the same industry. The Company internally uses both GAAP and Non-GAAP financial measures in connection with its own financial planning and reporting processes. Management utilizes Non-GAAP financial measures when allocating resources, deploying capital, as well as assessing business performance, and determining employee incentive compensation. The Company conducts its businesses internationally in local currencies, including Canadian dollars, Euro, and British pound sterling. As a result, the comparability of our results reported in U.S. dollars can be affected by changes in foreign currency exchange rates. We believe free cash flow is important to management and useful to investors as a supplemental measure as it indicates the cash flow available for working capital needs, re-investment opportunities, strategic acquisitions, share repurchases, dividend payments, or other strategic uses of cash. Nonetheless, Non-GAAP adjusted results and related Non-GAAP measures disclosed by the Company should not be considered a substitute for, nor superior to, financial results and measures as determined or calculated in accordance with GAAP. 3 of 3 Supplemental Non-GAAP Financial Information